Thursday, June 7, 2012

Automated Store Replenishment – Volume XVIII

Have you ever wondered why people you work with ‘just don’t get it?’ Things that are an absolute certainty to you, ‘those stupid people just don’t get it.’ I hear it a lot when observing the way retailers talk about their employees. “I can’t delegate responsibility to those people, they’re just stupid.” It is very sad. That kind of attitude is more prevalent in the areas of middle management than it is anywhere else in an organization. Is it a learned experience, or is it an assumption transferred down from higher up in the company? 

I have worked with hundreds of retailers, not only in their headquarters, but in their stores as well, and after three decades, I reached the conclusion, the success of a business seems to be directly proportional to the assumed intelligence of its lower-level employees. Which begs the question, “Do bad managers attract stupid people, or is the intelligence level of employees defined by the success of the enterprise?”

Three decades ago, one of my first customers convinced me that after ninety-days on the job, ALL employees steal. For him, everything was either black or white. There was no gray area. His opinion was, ‘on or about the ninety-first day of employment, employees would automatically start stealing money out of the cash drawer and taking unpaid product home.’ It took years for me to understand, his perception of reality was true, because he made it so.

Another widely held opinion is, “If they were smart, they wouldn’t be working as a cashier in a retail store.” These assumptions (and more) define a company and how it prospers. In short, ‘be careful with your affirmations, because they have a way of becoming assumptions governing company policy.’

Automated Store Replenishment (ASR) requires employee participation. If you are unable, for whatever reason, to delegate responsibility, it will never work for you. ASR is not about removing responsibility from employees. On the contrary, it is about empowering employees to assists in the  ASR process.

Automating purchases and sales is the easy part, IF you have a way of gathering sales from your POS and receiving invoices electronically from your suppliers. The difficult part is maintaining the proper levels of inventory. Not being able to track inventory on-hand may have not been so critical in the past, because much of the cost was taken into account within the margins. The cost of overstock was also included in those figures. But did you know, overstock is the primary contributor to out-of-stocks? That doesn’t make sense, does it? Let me say it another way: Too much of one thing has a way of taking up space where there is too little of another.

A few hours before inventory is ordered, many retailers expect their store managers to go through the store and search through 3,000 items looking for vacancies. With the exception of extremely fast movers, the absence of average movers are often missed, and it is average movers that result in substantial profits.

In looking through the records of most stores, you will find hundreds of items that had a decent turn rate in December, January and February, and show no turns in March, April and May. Once an item is missed the first time, it is likely it will be missed in the future. It is easy to put the blame on the store manager; but if you were doing it yourself, you would most likely make the same mistakes. Tracking the numbers of items in a store that suffers from overstock is beyond the capabilities of the human mind. Reorganizing the right amount of inventory in the right way will often do the trick. The decision of whether to automate the process using a computer is a simple exercise of evaluating costs. If you are tracking sales of items, and receiving electronic grocery purchases by item, and reduced your inventory to satisfy customer service levels, what is the next step in implementing an ASR program in your store(s)? 

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